In: Finance
The prices of several bonds with face values of
$1,000
are summarized in the following table:
Bond |
A |
B |
C |
D |
Price |
$972.50 |
$1,040.75 |
$1,150.00 |
$1,000.00 |
For each bond, state whether it trades at a discount, at par, or at a premium.
Discount bond: Price < Face value
Par bond: Price = Face value
Premium bond: Price > Face value
Bond A: $972.50 Discount bond
Bond B: $1,040.75 Premium bond
Bond C: $1,150.00 Premium bond
Bond D: $1,000.00 Par bond